If we are what we eat, and you get what you paid for. It should come as no surprise that with the TRILLIONS of dollars our government fed Wall Street, all we got was more of

Visit msnbc.com for Breaking News, World News, and News about the Economy

Seriously, why did we want to save this?

Two Giants Emerge From Wall Street Ruins

On Thursday, JPMorgan Chase became the latest big bank to announce stellar second-quarter earnings. Its $2.7 billion profit, after record gains for Goldman Sachs, underscores how the government’s effort to halt a collapse has also set the stage for a narrowing concentration of financial power.

Both banks now stand astride post-bailout Wall Street, having benefited from billions of dollars in taxpayer support and cheap government financing to climb over banks that continue to struggle. They are capitalizing on the turmoil in financial markets and their rivals’ weakness to pull in billions in trading profits.

JPMorgan’s renewed strength, like Goldman’s, comes as it vaults ahead of longtime rivals, especially in investment banking, including bond and equity trading, and underwriting debt to help companies issue shares and bonds. Traders took advantage of big market swings and less competition to post big gains in fixed-income and equities.

Michael J. Cavanagh, the chief financial officer at JPMorgan, said its profit and fees from this business were “a record for us in a quarter and a record for anybody at any firm in any quarter.” The bank, he added, was “so very proud of those results.”

Mr. Dimon is also gearing up for a series of battles in Washington. One is over tighter regulations for derivatives, a business where the bank generates lucrative fees as one of the industry’s largest players.

Another is the creation of a new consumer protection agency, which could threaten the profitability of the bank’s mortgage and credit card businesses if it introduces tougher regulations.


Or this?

Goldman Sachs VaR Reaches Record on Risks Led by Equity Trading

“Our model really never changed,” Goldman Sachs Chief Financial Officer David Viniar said yesterday in an interview. “We’ve said very consistently that our business model remained the same.”

Goldman Sachs, which was the biggest U.S. securities firm before converting to a bank, is the only one of its major Wall Street rivals that hasn’t been transformed by the financial crisis. Lehman Brothers filed for bankruptcy in September, while Bear Stearns Cos. was taken over by JPMorgan Chase & Co. and Merrill Lynch & Co. was sold to Bank of America Corp.

While the risk-taking has paid off for Goldman Sachs so far, some question whether it could be a perilous example for others to follow.

“Do we want other people trying to emulate what they’re doing, perhaps not with the same skill or resources?” asked Arthur Wilmarth, a professor at George Washington University law school who specializes in issues related to banking. “Regulators ought to be concerned and say ‘Is Goldman making this money with any kind of reasonable prudence?’”


What part of this is going to save our economy?

Goldman Sachs to Gain From Budget Woes Analyst

Ahead of its Tuesday earnings report, Goldman got a boost with Ms. Whitney’s upgrade today, in which she moved the firm to “buy” from “neutral” and increased her earnings-per-share estimate for the second quarter to $4.65 versus the Street’s estimate $3.48 estimate.

Why? Ms. Whitney’s call doesn’t stem from an inkling that the economy might improve. Quite the opposite. She says the feeble U.S. economy will be a boon to Goldman as the firm plays a key role in a “tsunami of debt issuance” from governments desperate to backfill growing budget gaps. With once-mighty competitors laid low by the financial crisis, Goldman has less competition now, Ms. Whitney says.


And how does this save Main Street?

Back to big profits for Wall Street powerhouse

While other firms have curtailed risk and preserved cash to protect against further losses, Goldman has returned to what made it so profitable in the past — high-risk trading and investing in everything from mortgages to commodities and underwriting of stock and debt offers.

“Goldman really is in a class by themselves,” said Phillip Silitschanu, a senior analyst with Aite Group. “They’ve always been the golden child of the market.”

Of course, Goldman also benefited because there are fewer competitors on Wall Street following the demise of Bear Stearns Cos. and Lehman Brothers Holdings Inc. in 2008. Both companies were felled by their investments in risky, and ultimately failed, mortgage-backed securities.


When will this bring the rest of us more jobs?

Goldman Sachs staff set for bumper bonuses as bank earns $38m per day

A leading US labour organisation, the Service Employees International Union, said Goldman’s pay practices are a strong argument for root and branch change in Wall Street’s compensation policy to end a culture of rewarding bankers for taking risks.

Stephen Lerner, director of the SEIU’s financial reform campaign said: “They have some kind of moral and economic amnesia. After we bail them out with tens of billions in taxpayers’ funds, they go back to exactly the same practices as before.”

Defending the bank’s compensation practices, Viniar said Goldman had a long established “pay for performance” policy and pointed out that staff saw a sharp drop in payouts when times were tougher in 2008. But he said: “If we do perform well, our employees will be rewarded appropriately.”

Analysts say that Wall Street trading houses face less vibrant competition after the demise of rivals such as Bear Stearns and Lehman Brothers, making it slightly easier to gain a financial edge. Gerard Cassidy, a banking analyst at RBC Capital Markets, said Goldman’s brand, viewed as trustworthy, and its ability to attract top talent contribute to the firm’s success.

“The economy’s not out of the woods yet but I would say the dark days of Wall Street are behind,” said Cassidy. “In the first quarter, we saw the first rays of sunshine.This quarter, we’ve got confirmation that the sun is shining brighter and that it will continue to do so as the economy recovers.”


More food for thought –

From Eliot Spitzer on Bloomberg:

From Matt Taibbi on MSNBC:

Visit msnbc.com for Breaking News, World News, and News about the Economy

  • Pingback: Vivian Norris de Montaigu: Wall Street:…. Robert Reich’s Blog: Goldman and JPMorgan…. | Total Info()

  • cathnealon

    Didn’t Wall street and Greed get us in this mess? Well, well, well now those who put BO in the WH with 675 billion(small donors, right.) are taking what has been promised–pay to play–and we taxpayers will be saying “please sir can I have some more?” as we fight for food.

  • Docelder

    Well China has just passed Japan with the second biggest “market”. They seem to be quick studies. What will happen the day young “grasshopper” takes the pebble from our hand for good? Not that we don’t have it coming, whatever that is.


  • WMCB

    Congresswoman Kaptur of Ohio KICKS ASS AND TAKES NAMES grilling Paulson. Watch the whole thing. She even links it to the “convenient” market crash jsut prior to the election.


    • politicalidentitycrisis

      Whoohoo! I wish I could vote for her, but I’m in MN. Notice how it’s the ladies who have to have some balls in 2009? That is an awesome video and it is too bad all of our elected officials don’t want ask tough questions!

    • politicalidentitycrisis

      I am now keeping a list of those who stand up for American taxpayers. I will only contribute to those who do next go round. That is, if I have any money to spare!

  • politicalidentitycrisis

    Sorry, this is off topic, but of any who witnessed the deplorable coverage of the tax day tea parties:


    • politicalidentitycrisis

      should have said for anyone who witnessed the deplorable coverage. sorry.

    • Docelder

      Of course, by arguing with a peon, she put herself as well as her entire organization on the same level of that peon.

  • OMG

    Oh and don’t forget about the eminent domain issue that was done right out the gate when he took residence. Because it looks like our wonderful new administration is granting the Chinese eminent domain as collateral for US debts. Yea you read that right. That means when we can no longer pay for all this massive spending the Chinese can call in the loans and take our land.

    The thought that American citizens and businesses could lose their land as a means of payment is downright scary. I highly doubt ANY American citizen would have voted for Obama if they knew this was coming down the pike.

    What is amazing is that the administration would actually trust the chinese to not call in the debt. Seriously, if anybody in the chinese government get the bright idea that expansionism is a cool thing to do we are up shit creek.

    Forget talking about socialism, we might end up half owned by communism before this is all over with. The irony is that China has discovered the beauty of capitalism in the last few years and yet our current government wants to get rid of it. What better way than to just hand it over?

    How about that for some serious change you can count on? “Hope” you like losing your land to foreigners with the written authority of the U.S. government.


    • politicalidentitycrisis

      Yes, we are selling off America piece by piece. It is like a huge garage sale. I wish I could buy the White House and the Capital and kick the present occupants out! Sadly, Americans are not included in the bargains of the give-aways of the country formerly known as America. Daley has given naming rights to a london based company. No more Sear Tower:


    • Docelder

      Private property is going to be one of the few real investment vehicles left now that the paper markets are exposed. What does the richest man in the world want above all else? More money of course. The same for the most powerful man in the world… he wants more power. Meanwhile, the most adulated man in the world wants above all else to be praised even more… and so it goes.

    • Onofre’s arm

      Well, before the Chi-coms foreclose on our country, maybe Uncle Sam could have one big ass garage sale, after all, that’s what many of us peons who are flirting with bankruptcy have to do.

    • arran

      Snopes.com claims this “Eminent Domain” claim is FALSE.

  • OMG

    Fed Chief Bernanke will be testifying before Congress on Tuesday.

    Bank of America joined other major banks in reporting better-than-expected second quarter income today, Friday, earning $2.42 billion even as losses from failed loans continued to rise.

    The results, which included $713 million of dividend payments tied to a federal bailout, compared with profits after preferred dividends of $3.22 billion in the same three-month period a year ago.

    Earnings per share, which reflected a much higher amount of shares outstanding, fell to 33 cents from 72 cents. That was well ahead of the 28 cents per share forecast of analysts surveyed by Thomson Reuters. http://news.yahoo.com/s/ap/20090717/ap_on_bi_ge/us_earns_bank_of_america

    And this just in from my corporate office:
    Weekly Jobless Claims came in at 522K, below the consensus forecast of 535K, and the data had little impact as there is some skepticism as to validity of the figure. (It is believed that the jobless claims # was actually worse than what was released based on some timing issues)

  • o

    Joe Biden: “We’ve Got To Spend Money To Keep From Going Bankrupt”

    • politicalidentitycrisis

      At least Joe is honest 9about the bankrupcy part), although in my own personal life if I keep spending money I will go bakrupt. Lets’ send Joe to economics class.

      “Say it ain’t so, Joe!”

      • Doc99

        Can the inevitable AFLAC commercial with Joe Biden in the barber chair instead of Yogi Berra be far behind? Stand Up For Chuck!

        • politicalidentitycrisis

          But seriously, I’d take Biden as POTUS any day and twice on Sunday over Otrauma. Seriously. I’d take almost anybody. Almost.

  • tzada

    Government always thinks everything is about leadership. It never is. It’s about the people.

    • OMG

      They do not represent us anymore. Read the stickusuporkulous bill. Each member of congress is getting billions. yep you read that right. Billions upon billions each for their own discretion. Now you know why $600 sneakers and a $9,000 pcketbook is peanuts to them. I’m shocked at the taxes taken out of my paycheck. This is highway robbery. Do they pay taxes on their billions of stolen dollars?
      Why hasn’t this been reported by MSM?
      Time to recall all of them without delay.

      • Docelder

        They do not represent us anymore.

        Yes, it is as though governance has become a right… instead of a duty. We have recreated our own version of King George.

  • justme_kc

    my hubby works for jp morgan. he found out this week that his job is being outsourced to India… out of the 40ish people in his group, they are keeping 3 people. then yesterday he finds out that HIS actual job function IS staying in the US, but he’s still being laid off because a girl in his dept who is here on a work visa from cambodia is going to be trained to do his job. 1 of the other 3 people staying is also in this country on a work visa. wtf is wrong with that picture!

    • The deal with work visas is that they are only supposed to be given if no American has the skills to do the job in question. He should complain to immigration, seriously.

  • WMCB

    Today from Krugman:

    Over the past generation — ever since the banking deregulation of the Reagan years — the U.S. economy has been “financialized.” The business of moving money around, of slicing, dicing and repackaging financial claims, has soared in importance compared with the actual production of useful stuff. The sector officially labeled “securities, commodity contracts and investments” has grown especially fast, from only 0.3 percent of G.D.P. in the late 1970s to 1.7 percent of G.D.P. in 2007.

    That is the incomprehensible error of those media mouthpieces touting soaring stocks in financials, or soaring profits of big banks, as any kind of indicator of economic health.

    There was a time in this country when that would have been true. When banks were investing in real businesses that actually DID something, and EMPLOYED people. In days long past, a climbing stock market DID indicate that American businesses (and hence American workers) were doing well.

    That time is no more. Yet so many continue blithely to believe that “what is good for Wall Street is good for the country”, totally ignoring the massive shift in Wall Street – and the fact that Wall Street is no longer as heavily invested in “America” as they once were. They are now merely invested in themselves, trading empty paper “assets” back and forth, and making a killing on every trade, up or down.

    I’m a capitalist. But this is not capitalism, folks – it’s oligarchy and looting.

    • Docelder

      trading empty paper “assets” back and forth, and making a killing on every trade

      Exactly so, and as “if” the solution to any problem was yet another empty market whereby “carbon” credits are traded as if they had any authentic value. These markets are all blue sky.

  • Thanks for bringing this to everyone’s attention, Linda. Here are some other great pieces on the goody grabs and the Fed’s role in them:

    On Goldman grab: http://dailybail.com/home/what-wall-street-owes-you-by-janet-tavakoli.html

    And this is one about $1 trillion in Fed money–whereabouts unknown (internal auditor unable to locate): http://dailybail.com/home/there-are-no-words-to-describe-the-following-part-ii.html

    When will we say “enough”?

    • choo choo magoo

      Great links SNK!!

  • lark

    Happy endings supports better sleeping, fewer nightmares, and a rested morning feeling.

  • Peggy Sue

    What appalls me is that they’ve flat out stated that they’re not changing their business model, the very high risk model that brought the economy down. And they’re doing it on the taxpayer’s dime and then puffing their chests out and claiming victory.

    I like Elizabeth Warren but the overseers and regulators don’t appear to have any teeth to rein these institutions in and I don’t see that changing as long as the financial houses have the ear of the WH and Congress.

    Ordinary citizens are not being served. We’re being robbed in broad daylight and being told it’s a good thing. We really are living in Wonderland!

    • Docelder

      financial houses have the ear of the WH and Congress

      We are past that. More like racketeering and influence.

    • choo choo magoo

      I agree Peggy Sue –

      E. Warren has the integrity and passion and determination needed, with out a doubt. But at this stage we’d have to clone hundreds of her in every agency to save our sinking ship. Besides I am less than confident that they will actually allow her to change any things.

  • oowawa

    Oh please Mr. Goldman Sachs sir, don’t take my last bowl of gruel . . .

  • politicalidentitycrisis


  • Docelder

    The price of “change”. Manufactured crises don’t come cheap.

  • Tricia Spiegel

    I’m gonna go throw up now. OUTRAGEOUS!!!!!

    (Elizabeth Warren is a new personal hero. Eliot Spitzer used to be before he broke my heart with his crazy pants behavior, but I am hoping to forgive him.)

    • trixta

      Isn’t it a coincidence that Spitzer — the “sheriff of Wall Street” — was taken out before the “economic meltdown” and the GE last year?

      • choo choo magoo

        ya, it kind of makes you wonder when you consider the other anti big business guy – John Edwards was taken out the same way.